ANNUAL ACCOUNTS 2013/14

Transcription

1 ANNUAL ACCOUNTS 2013/14

2 FOREWORD TO THE ACCOUNTS These accounts for the year ended 31 March 2014 have been prepared by Croydon Health Services NHS Trust under Section 232, Schedule 15, of the National Health Service Act 2006 in the form which the Secretary of State has directed with the approval of the Treasury. Foreword to the Accounts Page 1

3 STATEMENT OF THE CHIEF EXECUTIVE'S RESPONSIBILITIES AS THE ACCOUNTABLE OFFICER OF THE TRUST The Chief Executive of the NHS has designated that the Chief Executive should be the Accountable Officer to the Trust. The relevant responsibilities of Accountable Officers are set out in the Accountable Officers Memorandum issued by the Department of Health. These include ensuring that: - there are effective management systems in place to safeguard public funds and assets and assist in the implementation of corporate governance; - value for money is achieved from the resources available to the Trust; - the expenditure and income of the Trust has been applied to the purposes intended by Parliament and conform to the authorities which govern them; - effective and sound financial management systems are in place; and - annual statutory accounts are prepared in a format directed by the Secretary of State with the approval of the Treasury to give a true and fair view of the state of affairs as at the end of the financial year and the income and expenditure, recognised gains and losses and cash flows for the year. To the best of my knowledge and belief, I have properly discharged the responsibilities set out in my letter of appointment as an Accountable Officer. John Goulston Chief Executive Date: 4th June 2014 Chief Executive's Statement Page 2

4 STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE ACCOUNTS The directors are required under the National Health Service Act 2006 to prepare accounts for each financial year. The Secretary of State, with the approval of the Treasury, directs that these accounts give a true and fair view of the state of affairs of the Trust and of the income and expenditure, recognised gains and losses and cash flows for the year. In preparing those accounts, directors are required to: - apply on a consistent basis accounting policies laid down by the Secretary of State with the approval of the Treasury; - make judgements and estimates which are reasonable and prudent; - state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the accounts. The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Trust and to enable them to ensure that the accounts comply with requirements outlined in the above mentioned direction of the Secretary of State. They are also responsible for safeguarding the assets of the Trust and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The directors confirm to the best of their knowledge and belief they have complied with the above requirements in preparing the accounts. By order of the Board John Goulston Chief Executive Date: 4th June 2014 Azara Mukhtar Director of Finance & Planning Date: 4th June 2014 Directors' Certificate Page 3

5 Independent Auditor's report to the Directors of Croydon Health Services NHS Trust We have audited the financial statements of Croydon Health Services NHS Trust for the year ended 31 March 2014 under the Audit Commission Act The financial statements comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Taxpayers Equity, the Statement of Cash Flows and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and the accounting policies directed by the Secretary of State with the consent of the Treasury as relevant to the National Health Service in England. We have also audited the information in the Remuneration Report that is subject to audit, being: the table of salaries and allowances of senior managers and related narrative notes the table of pension benefits of senior managers and related narrative notes the table of pay multiples and related narrative notes. This report is made solely to the Board of Directors of Croydon Health Services NHS Trust in accordance with Part II of the Audit Commission Act 1998 and for no other purpose, as set out in paragraph 44 of the Statement of Responsibilities of Auditors and Audited Bodies published by the Audit Commission in March To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Trust's directors and the Trust as a body, for our audit work, for this report, or for opinions we have formed. Respective responsibilities of Directors and auditor As explained more fully in the Statement of Directors Responsibilities, in respect of the accounts, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board s Ethical Standards for Auditors. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Trust s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Trust; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report which comprises the Introduction by the Chairman and Chief Executive, About the Trust and the community it serves, The Trust Board, Our Strategic direction, Workforce development, How we are doing, The financial review, The summary financial statements and other notes and statements to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Opinion on financial statements In our opinion the financial statements: give a true and fair view of the financial position of Croydon Health Services NHS Trust as at 31 March 2014 and of its expenditure and income for the year then ended; and have been prepared properly in accordance with the accounting policies directed by the Secretary of State with the consent of the Treasury as relevant to the National Health Service in England. Opinion on other matters In our opinion: the part of the Remuneration Report subject to audit has been prepared properly in accordance with the requirements directed by the Secretary of State with the consent of the Treasury as relevant to the National Health Service in England; and the information given in the annual report for the financial year for which the financial statements are prepared is consistent with the financial statements. Matters on which we report by exception We report to you if: in our opinion the governance statement does not reflect compliance with the Trust Development Authority's Guidance we refer a matter to the Secretary of State under section 19 of the Audit Commission Act 1998 because we have reason to believe that the Trust, or an officer of the Trust, is about to make, or has made, a decision involving unlawful expenditure, or is about to take, or has taken, unlawful action likely to cause a loss or deficiency; or we issue a report in the public interest under section 8 of the Audit Commission Act We have nothing to report in these respects. Conclusion on the Trust's arrangements for securing economy, efficiency and effectiveness in the use of resources Respective responsibilities of the Trust and auditor The Trust is responsible for putting in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources, to ensure proper stewardship and governance, and to review regularly the adequacy and effectiveness of these arrangements. We are required under Section 5 of the Audit Commission Act 1998 to satisfy ourselves that the Trust has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources. The Code of Audit Practice issued by the Audit Commission requires us to report to you our conclusion relating to proper arrangements, having regard to relevant criteria specified by the Audit Commission. Auditor's Certificate Page 4

6 Independent Auditor's report to the Directors of Croydon Health Services NHS Trust We report if significant matters have come to our attention which prevent us from concluding that the Trust has put in place proper arrangements for securing economy, efficiency and effectiveness in its use of resources. We are not required to consider, nor have we considered, whether all aspects of the Trust s arrangements for securing economy, efficiency and effectiveness in its use of resources are operating effectively. Scope of the review of arrangements for securing economy, efficiency and effectiveness in the use of resources We have undertaken our audit in accordance with the Code of Audit Practice, having regard to the guidance on the specified criteria, published by the Audit Commission in October 2013, as to whether the Trust has proper arrangements for: securing financial resilience challenging how it secures economy, efficiency and effectiveness. The Audit Commission has determined these two criteria as those necessary for us to consider under the Code of Audit Practice in satisfying ourselves whether the Trust put in place proper arrangements for securing economy, efficiency and effectiveness in its use of resources for the year ended 31 March We planned our work in accordance with the Code of Audit Practice. Based on our risk assessment, we undertook such work as we considered necessary to form a view on whether, in all significant respects, the Trust had put in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources. Basis for adverse conclusion In seeking to satisfy ourselves that the Trust has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources, we have considered the following matters in relation to securing financial resilience: The Trust failed to achieve its statutory breakeven duty for 2013/14, agreeing an 8.8m deficit position with the NHS Trust Development Authority (TDA) at the start of the year, which it then failed to deliver. The Trust recorded a deficit of 19.7m (after technical adjustments). The Trust achieved only 66% of its 10m QIPP programme in 2013/14. This followed two previous years where it only delivered 70% of its planned QIPP programmes. The Trust is projecting budget deficits of 17.9m and 12.6m for 2014/15 and 2015/16 respectively. This means it will not make the statutory requirement to break even over a three year period. It is not yet known whether permission will be given to extend this to a five year period. The Trust is yet to finalise a sustainable five year Medium Term Financial Plan, although it is working to a national timescale of submission to the TDA in June In seeking to satisfy ourselves that the Trust has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources, we have considered the following matters in relation to challenging how it secures economy, efficiency and effectiveness: As at mid April 2014, the Trust had not identified 6.6m of its 15.9m QIPP target for 2014/15. The Trust's achievement of the 2014/15 budget deficit above is, in itself, dependent on the Trust fully identifying realistic, feasible and achievable QIPP schemes, and delivering 100% of these in year. In 2013/14 and previous years the Trust failed to deliver less challenging QIPP programmes. The results of the Care Quality Commission (CQC) inspection in September 2013 triggered 13 action points which the Trust has recognised as requiring improvement via the Trust's wider 57 point action plan. The Trust has made progress against key quality and safety objectives during the year, as acknowledged by CQC, and the direction of travel is positive. However, CQC is clear that significant work remains to be done to embed these improvements and ensure all aspects of the Trust's services are operating safely. In particular, the results of the Trust's national adult inpatient survey remain in the lowest quartile nationally. Adverse conclusion On the basis of our work, having regard to the guidance on the specified criteria published by the Audit Commission in October 2013, the matters reported in the basis for adverse conclusion paragraph above prevent us from being satisfied that in all significant respects Croydon Health Services NHS Trust put in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources for the year ending 31 March Delay in certification of completion of the audit We cannot formally conclude the audit and issue an audit certificate until we have completed the work necessary to provide assurance over the Trust s annual quality accounts. We are satisfied that this work does not have a material effect on the financial statements or on our value for money conclusion. Paul Grady for and on behalf of Grant Thornton UK LLP, Appointed Auditor Grant Thornton House Melton Street London NW1 2EP 4 June 2014 Auditor's Certificate Page 5

7 Independent auditor's report to the Directors of Croydon Health Services NHS Trust Issue of audit opinion on the financial statements In our audit report for the year ended 31 March 2014 issued on 4 June 2014 we reported that, in our opinion, the financial statements: gave a true and fair view of the financial position of Croydon Health Services NHS Trust as at 31 March 2014 and of its expenditure and income for the year then ended; and had been prepared properly in accordance with the accounting policies directed by the Secretary of State with the consent of the Treasury as relevant to the National Health Service in England. Issue of adverse value for money conclusion In our audit report for the year ended 31 March 2014 issued on 4 June 2014 we reported an adverse value for money conclusion in the following terms: Basis for adverse conclusion In seeking to satisfy ourselves that the Trust has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources, we have considered the following matters in relation to securing financial resilience: The Trust failed to achieve its statutory breakeven duty for 2013/14, agreeing an 8.8m deficit position with the NHS Trust Development Authority (TDA) at the start of the year, which it then failed to deliver. The Trust recorded a deficit of 19.7m (after technical adjustments). The Trust achieved only 66% of its 10m QIPP programme in 2013/14. This followed two previous years where it only delivered 70% of its planned QIPP programmes. The Trust is projecting budget deficits of 17.9m and 12.6m for 2014/15 and 2015/16 respectively. This means it will not make the statutory requirement to break even over a three year period. It is not yet known whether permission will be given to extend this to a five year period. The Trust is yet to finalise a sustainable five year Medium Term Financial Plan, although it is working to a national timescale of submission to the TDA in June In seeking to satisfy ourselves that the Trust has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources, we have considered the following matters in relation to challenging how it secures economy, efficiency and effectiveness:

8 As at mid April 2014, the Trust had not identified 6.6m of its 15.9m QIPP target for 2014/15. The Trust's achievement of the 2014/15 budget deficit above is, in itself, dependent on the Trust fully identifying realistic, feasible and achievable QIPP schemes, and delivering 100% of these in year. In 2013/14 and previous years the Trust failed to deliver less challenging QIPP programmes. The results of the Care Quality Commission (CQC) inspection in September 2013 triggered 13 action points which the Trust has recognised as requiring improvement via the Trust's wider 57 point action plan. The Trust has made progress against key quality and safety objectives during the year, as acknowledged by CQC, and the direction of travel is positive. However, CQC is clear that significant work remains to be done to embed these improvements and ensure all aspects of the Trust's services are operating safely. In particular, the results of the Trust's national adult inpatient survey remain in the lowest quartile nationally. Adverse conclusion On the basis of our work, having regard to the guidance on the specified criteria published by the Audit Commission in October 2013, the matters reported in the basis for adverse conclusion paragraphs above prevent us from being satisfied that in all significant respects Croydon Health Services NHS Trust put in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources for the year ending 31 March Certificate In our report dated 4 June 2014 we explained that we could not formally conclude the audit on that date until we had completed the work to provide assurance on the Trust s annual quality account. We have now completed this work. No matters have come to our attention since that date that would have a material impact on the financial statements on which we gave an unqualified opinion or a significant impact on our conclusion on the Trust's arrangements for securing economy, efficiency and effectiveness. We certify that we have completed the audit of the accounts of Croydon Health Services NHS Trust in accordance with the requirements of the Audit Commission Act 1998 and the Code of Audit Practice issued by the Audit Commission. Paul Grady Director and Engagement Lead for and on behalf of Grant Thornton UK LLP, Appointed Auditor Grant Thornton UK LLP Melton Street London NW1 2EP 30 June 2014

9 Annual Governance Statement Scope of responsibility The Trust Board is collectively accountable for governance at Croydon Health Services NHS Trust. As the Accountable Officer and Chief Executive of this Board, I have responsibility for maintaining a sound system of governance that supports the achievement of the organisation s policies, aims and objectives. I also have responsibility for safeguarding the public funds and the organisation s assets, for which I am personally responsible as set out in the Accountable Officer Memorandum. Accountability for risk management is set out in the Trust s Risk Management Strategy, revisions to which the Trust Board considered and approved in September. The Executive Team is collectively responsible for maintaining the systems of internal control and directors are accountable to me for ensuring effective governance arrangements in their individual areas of responsibilities. These areas of responsibility are detailed in the Trust s Scheme of Delegation. Strategic Context The last 12 months have been extremely challenging for Croydon Health Services. During 2012/13, every Non-Executive Director (including the former Chair) had departed and governance deteriorated to the point where CHS suspended its existing framework and put in place interim arrangements pending a full scale review of Governance. Following the substantive appointments of Chief Executive and Chair in early 2013, a comprehensive refresh has been undertaken of Board membership and governance. The financial position of the trust has deteriorated during the course of 2013/14 with a 0.009m surplus in 2012/13 to 25.4m deficit in 2013/14 including impairments and technical adjustments. A number of factors have contributed to this deterioration, including ensuring wards have operated at safe staffing levels, greater than expected expenditure on agency and other temporary staff across all staff categories, underperformance against our planned savings schemes and the implementation and embedding in of our new patient administration system, CRS Millennium (Cerner), in October The Cerner system was a major upgrade to our patient administration system and allowed a number of standalone systems to be integrated and it impacted significantly on the ways our clinical and non-clinical administration staff, operated within the trust. The adverse financial impact of the Cerner Implementation is a result of technical delays and associated costs, additional training and staff time associated with delays and complexity, reduction in income related to planned capacity reductions in elective care and additional clinical support required in Emergency Department as a result of downtime in elective care. The national efficiency requirement of 4%, embedded in the tariff for 2013/14, resulted in a 10m efficiency challenge for the Trust (of which 0.5m was added mid-year as an additional stretch target). In the event, however, we achieved only 6.6m of QIPP savings in the year. This is clearly of concern to the Trust and to its external auditors, who have qualified their opinion of its achievement of Value for Money in view of their concerns over the long term financial sustainability of the Trust. In September 2013, the CQC visited the Trust. We were the first Trust to experience the new Chief Inspector of Hospital of Inspections. The inspection reported that the wards generally provided safe & effective care, but the CQC inspection team identified four areas in which improvements were needed in order to demonstrate compliance with our statutory responsibilities, as well as a variety of other suggestions and recommendations for ways in which our services could be improved for the benefit of patients. In response to these quality issues we have been investing additional resources to help improve our performance. This has put further strain on our finances in 2013/14, however, we remain committed to ensuring that we invest in areas that need improving. Governance Framework The Trust Board has overall responsibility for reviewing the effectiveness of internal controls: clinical, financial, environmental and organisational and as such requires that each of its committees has agreed terms of reference that describe their duties, responsibilities and accountabilities, and the process for assessing and monitoring effectiveness, upon which they report annually to the Board. The Board itself has Standing orders, reservations and delegation of powers and standing financial instructions in place which are reviewed annually. I am satisfied that these are all in place and functioning appropriately, and that the Trust s governance arrangements are consistent with the HM Treasury/Cabinet Office Corporate Governance Code. As the Accountable Officer, I support the Chairman in ensuring the effectiveness of performance of the Board and its committees. In addition to the regular annual review of effectiveness of each committee, the independent review of governance arrangement mentioned above and in last year s Statement was accepted by the Board in May, and implemented progressively over the year, resulting in a new system of accountabilities to improve the effectiveness of the board s committee framework (Appendix 1), and a further review of the structure of Clinical Directorates was completed in October and implemented in November (Appendix 2). The main changes which resulted from these reviews were: A reduction in the number of s from nine to five (Audit; Remuneration; Finance and Performance; Quality and Clinical Governance; and Charitable Funds), eliminating duplication between s; Streamlining and rationalisation of the supporting structure of Executive s; Rationalisation of the membership of s, and more careful planning of the timing and frequency of meetings; Revision and clarification of the Trust s Strategic Objectives; Revision and replacement of the Board Assurance Framework; Appointments of two further non-executive Directors, and of a Chief Operating Officer (Deputy Chief Executive), Director of Informatics, Director of Finance and Planning and Director of Corporate Governance; Commencement of a Board Development Programme; Rebalancing of Clinical Directorates ensuring clearer lines of accountability and strengthened management. A further challenge was presented by the resignation of the Director of Informatics on Health Grounds in March. In order to bolster the executive team, however, an Interim Director of Planning and Information has been appointed to the Board to meet the challenge of producing a five year strategic plan for the Trust. Each clinical directorate has a governance structure which reports into a directorate Performance and Quality Board; these in turn report directly into the trust-wide governance framework (see Appendices). A further review of Clinical Governance is now underway aimed at clarifying accountabilities under the new structure. When this is complete, the changes to our governance arrangements will be evaluated, to determine if they have succeeded in their objective of improving the overall effectiveness of the Board, and its compliance with the Corporate Governance Code. The Assurance Framework was reviewed by the Audit and the Trust Board during the course of the year. Annual Governance Statement Page 8

10 Annual Governance Statement The Trust Board met in public on 5 occasions in 2013/14 and was noted to be quorate on all occasions. The Trust held its Annual General Meeting on 30 th September. s of the Board met as follows: Board s No. Meetings Quorate Audit 6 100% Remuneration 4 100% Finance and Performance 9 100% Quality and Clinical Governance % Charitable Funds 3 100% The Quality Improvement Plan for Croydon Health Services, adopted by the Trust Board on 5th February 2014, sets out a trajectory of service improvement across all aspects of our Acute Services which, within 12 months, will address all of the concerns raised by the CQC in their September 2013 visit, as well as actions outstanding from previous CQC reports, the Francis Response (and the Government s response to it) and the report of Ann Clwyd MP into complaints handling. The fifty seven actions in the plan are organised under the five domains of quality used by the CQC in their investigations, but are managed within the clinical directorates responsible for their delivery. Each project has an Executive Lead who acts as Senior Responsible Officer, plus identified Owner for each milestone. A key subset of the projects has been identified under the Trust s Listening into Action programme, and so are governed under the suite of Wave Three projects CHS is delivering as a Beacon Trust. Progress across the whole suite of activities has been monitored monthly by the Trust s Risk Assurance and Policy Group (RAPG chaired by the Trust s Director of Corporate Governance) which ensures projects are delivered to time, receives reports by exception for any projects at risk of slippage, and acts as Gatekeeper for any further activities which may be candidates for addition to the plan going forward. In the coming year, programme management will be further strengthened through the involvement of the Programme Management Office (PMO). RAPG reports to the Executive Management Board, and also produces a monthly report on progress against the plan to the Quality and Clinical Governance of the Trust Board. In addition, a Turnaround Board has recently been formed in order to fulfil the financial objectives of CHS whilst not compromising on the quality, clinical, safety and operational performance of the Trust. The Turnaround Board will oversee the development and delivery of the CHS Turnaround Plan. The role of the Turnaround Board is to: Provide input into, review and oversee the development of the CHS Turnaround Plan (which consists of the QIPP, market repatriation and Quality Improvement programmes) to ensure that it delivers the strategic quality and financial objectives for the Trust; Monitor implementation and delivery of the CHS Turnaround Plan from FY14/15; and Highlight and agree how to manage key risks to delivery. The Turnaround Board is ultimately accountable to the Finance and Performance for the development and delivery of the Turnaround Plan and is also accountable to the Quality and Clinical Governance for the delivery of the Quality Improvement Plan. Both s report to the Trust Board with a monthly escalation report and to NHS Trust Development Authority & Croydon Clinical Commissioning Group. Risk and Control Framework The Trust is committed to providing high quality care, in an environment which is safe for patients, visitors and staff and which is underpinned by the public service values of accountability, probity and openness. Robust risk management and internal control are an essential part of good governance and is integral to the delivery of this commitment. At the March 2013 the Trust Board took the decision to combine the Board Assurance Framework (BAF) and the Corporate Risk Register (CRR) into one document. The Corporate Risk Assurance Framework (CRAF) has been developed as a response to this directive, under the leadership of the Director of Corporate Governance. It was approved and adopted by the Board at its September 2013 meeting. The CRAF in its new form provides a structure and process that enables the Trust Board to focus on those risks that might compromise achievement of the annual objectives and to map out key controls that are in place to manage those risks. It is presented to the newly constituted Risk and Policy Assurance Group monthly and this Group makes recommendations to the Executive Management Board, and ultimately the Audit before being received by the Trust Board. It provides the evidence of assurance required by the Trust Board to have confidence that the activity meets the organisations objective s and level of risk. The Risk and Policy Assurance Group is chaired by the Director of Corporate Governance and has representation from all directorates. Its function is to ensure that the Trust has a robust Corporate Risk Assurance Framework and risk management arrangements in place and to provide advice and support on all matters relating to risk management within the Trust. It reviews the CRAF monthly and also undertakes Deep Dives on the Directorate risk registers and reports on these to the Audit on the findings of these reviews. The key aims of the Trust s risk management approach is to ensure that all risks to the Trust s achievement of strategic objectives are identified, analysed, evaluated, monitored and managed appropriately. This considerably strengthened system of risk management is described in the trust s Risk Management Strategy which is accessible to all staff via the Trust intranet. Annual Governance Statement Page 9

11 Annual Governance Statement The Trust s system for internal control is designed to manage risk to a reasonable level rather than to eliminate all risk of failure to achieve policies, aims and objectives; it can therefore only provide reasonable and not absolute assurance of effectiveness. The system of internal control is based on an on-going process designed to identify and prioritise the risks to the achievement of objectives, to evaluate the likelihood of those risks being realised and the impact should they be realised, and to manage them efficiently, effectively and economically. Risks are identified through feedback from many sources such as proactive risk assessments, adverse incident reporting and trends, clinical benchmarking, audit data, complaints, legal claims, patient and public feedback, stakeholder/partnership feedback and internal / external assurance assessments. All business cases and proposed service reconfigurations are routinely risk assessed and all corporate committee papers are asked to provide narrative on risk and equality impact. Risks are evaluated using a recognised risk assessment tool which assesses the impact and likelihood of the risk occurring using a 5 x 5 scoring matrix. This risk score feeds into the decision-making process about whether a risk is considered acceptable. High level risks require control measures / contingency plans to reduce them to an acceptable level. These risks are escalated to the Corporate Risk Register at the point at which they threaten the achievement of one of the Trust s Strategic Objectives. Each risk has an identified owner who is responsible for reassessing and monitoring the effectiveness of the controls in place to manage and mitigate the risk; this is recorded and reported back at appropriate committees. The Integrated Governance Team, which includes the risk and assurance teams, supports staff in disseminating good practice across the organisation. Risk management training is a mandatory requirement for Trust staff at induction. A new training package has been developed for the executive team and also for all managers at Band 7 and above. This sets out the risk assessment and escalation and management process and also explains the principles around risk appetite. External assurance as to the appropriateness of the risk management system was provided in 2012 with the successful assessment at Level 1 of the Health Service Litigation Authority (NHSLA). NHSLA Level 1 is an assessment of how well the policy framework that governs risk management in a NHS organisation is organised. The Trust s Risk Assurance Framework was reviewed by its Internal Auditors in February The auditors observed that the new CRAF was a relatively new risk management tool and, as identified by the RAPG and Audit, there was a need to increase its robustness and effectiveness in terms of ensuring effective risk mitigations for a number of the risks included on it. The auditors observed that Its continued robustness would also be impacted by the effectiveness of review of directorate risk registers which were at that time of variable quality. Audit thus considered a reasonable assurance level to be appropriate. Section 11 of the Health and Social Care Act 2008 places a duty on the NHS to consult and involve patients and the public in the planning and development of health services and in making decisions affecting the way those services operate. The Trust has continued to strengthen closer working relationships with public stakeholders through the Improving Patient Experience to work alongside the many user groups already engaged within the Trust, with the aim of providing information about issues relating to service provision. A new strategy for public and patient voice, Our People, our Community, our NHS Health Services, has been developed to set standards and a framework for our work with patients, and members of the public. During our work to develop the Patient Led Assessment of the Care Environment, has provided an opportunity for greater engagement in improving trust services. This is undertaken through an environment of openness, transparency and accessibility in order to allow the public to engage with the Trust to make service improvements. The Trust has also used its "Listening into Action" programme (for which it is a Beacon Trust) to involve patients in the development of its services by organising two "Big Conversations" for patients (and one for Stakeholders) in January and February. As an employer with staff entitled to membership of the NHS Pension Scheme, control measures are in place to ensure all employer obligations contained within the Scheme regulations are complied with. This includes ensuring that deductions from salary, employer s contributions and payments into the Scheme are in accordance with the Scheme rules, and that member Pension Scheme records are accurately updated in accordance with the timescales detailed in the Regulations. Control measures are in place to ensure that all the organisation s obligations under equality, diversity and human rights legislation are complied with. The systems of internal control has been in place in Croydon Health Services NHS Trust for the year ending 31 March 2014 and up to the date of approval of the annual report and accounts. The management of the Trust takes seriously the potential threat and losses associated with possible fraud, bribery and corruption. The Trust has complied with NHS Protect s Standards for Providers and nominated a professionally accredited Local Counter Fraud Specialist (LCFS) who undertakes a programme of work designed to raise awareness amongst staff of possible fraud, bribery and corruption and to carry out investigations of any suspicions of fraud, bribery and corruption. The LCFS provide reports to each Audit of the progress of all proactive and reactive work including on-going investigations. The annual work plans of our LCFS are risk based and cover a wide range of activities and follow the guidance produced by NHS Protect. Included within these plans are specific exercises, known as proactive reviews, which seek to identify the risk of fraud, bribery and corruption. Our LCFS has undertaken a number of these exercises under the direction and overall management of NHS Protect. Staff are encouraged, through our counter fraud and corruption and whistle-blowing policies, to raise and refer any concern about fraud, bribery and corruption to the LCFS who will undertake an appropriate investigation. This encouragement is reinforced through the regular awareness presentations given by the LCFS to Trust staff. The Counter Fraud Strategy and Policy have been updated to reflect the new Standards for Providers. New risks identified in 2013/14: The new CRAF took effect from September 2013, containing 21 Principal Risks, of which 8 were at that time red-rated. During the year, two risks were added to the CRAF ; Operational readiness following the implementation of Cerner ; and Financial and Reputational loss to the Trust due to Fraud and / or Bribery. The first of these risks was rated red on creation, and its score on the 5x5 matrix increased from 15 to 20 in October; the second was rated green throughout the year, scoring 6. Annual Governance Statement Page 10

12 Annual Governance Statement In February, two of the risks (Failure to achieve QIPP Target; and Failure to meet the TDA Control Total) were declared as Issues to the Trust Chair and Audit. This was because in both cases, the risk had materialised: in respect of the first, only 66% of the 10m QIPP programme had been achieved over the year; and in respect of the second, the actual deficit for the year was 19.8m (after technical adjustments), against an original forecast deficit for the year of 8.8m Data security breaches The Trust is committed to ensuring that its information is managed to the highest standards and in accordance with the Health and Social Care Act 2008, Care Standards Act 2000, The Data Protection Act 1998, The Freedom of Information Act 2000, Central Government Policies and best practice Guidance from organisations such as the Information Commissioner s Office. In March, following the review of incidents reported to the Information Commissioner s Office (ICO) by the Trust, the ICO requested a visit to review practices in relation to Information Risk Management. The review process covered everything from how we train our staff to keep our information safe to how we store, manage and access data, our oversight structures and how we manage any mistakes that are made in keeping our important data secure. The review took place between the 10 th and 11 th of March 2014, and found many examples of how the Trust is improving its IG work, noting among its findings that; There is an over-arching management framework and structure in operation for Information Governance Although no significant weakness in control was uncovered, 18 recommendations for improvement were made, of which 9 are identified as priority for action. There were 7 incidents of a data breach which met the criteria for reporting to the Information Commissioner s Office. Four of these concerned sending correspondence or s to an incorrect address. In one case, invoices sent to the DMIC Safe Haven contained sensitive patient information, and in another the notification of a case of MRSA to the CCG contained more information than was necessary. A final case was thought to involve a breach of the Human Fertility and Embryology Regulations, but was de-escalated when this was found not to be the case. Performance against national priorities set out on the NHS Operating Framework 2012/13 4hr access standard in Accident and Emergency The standard was achieved for 2013/14 following significant service improvements being made throughout the year in the Emergency Department, hospital, community services and across the whole system. Key operational issues have been addressed to improve patient flow in the hospital from the door to the ward for all Emergency patients. This has included the introduction of a Consultant led Rapid Assessment and Treatment facility for all ambulance arrivals which has provided a demonstrable improvement in ambulance handover times with zero patients waiting over 60 minutes from August. This improvement was sustained despite increasing pressures over the winter months due to the changes being embedded by the Emergency Department Team. The Trust has continued to significantly invest in the Acute Medical Unit and has further plans in place to continue the improvements going forward into 2014/15. The strategic capital application has been submitted to address the physical limitations of the Emergency Department for a re-build within 2014/15 to 2015/ Weeks referral to Treatment - Following the implementation of the action plan, the Trust achieved compliance of all specialties in open pathways for all specialties from August The challenge for achieving non admitted performance for key specialties such as Trauma & Orthopaedics and General Surgery continued with these specialities continuing to deliver admitted performance. The Trust launched CRS Millennium in October 2013 which had an impact on data quality and thereby on RTT performance. Although performance was achieved throughout this period, the level of achievement did reduce after the launch but has seen an upward trajectory since January Cancer waits Referral to Treatment for Urgent Suspected Cancer (62 days) - The Trust achieved the Cancer targets across the six standards for Cancer access with the exception of Referral to Treatment for Urgent Suspected Cancer (62 days). Since December 2013, the Trust has seen an increase in 2 weeks wait referrals and thereby an increase in the number of patients to be treated by 62 days. The Trust has invested in the department to ensure robust tracking of all patients on a cancer pathway as these patients can often receive treatment form a number of partner organisations when medically necessary. In addition the Trust is reviewing specific demand and capacity and best practice pathways. Control of infection (C-difficile) target - the introduction of the dual testing regime has meant that this improvement in patient safety indicator means many more patients fall in to the high risk definition for testing. This has been compounded by a series of noro-virus outbreaks. Core control of infection remains sound in the Trust and this is demonstrated on our excellent performance on MRSA and our internal standard operating procedures being seen as compliant and fit for purpose following peer review visit. Review of effectiveness As Accountable Officer, I have responsibility for reviewing the effectiveness of systems of internal control. My review is informed by the work of the internal auditors, clinical audit and the senior management team within the Trust who have responsibility for the development and maintenance of the internal control framework. I have drawn on the content of the Quality Report and other performance information available to me. My comments are also informed by comments made by the external auditors in their reports. I have been advised on the implications of the result of the effectiveness of the system of internal control by the Board, the Audit and the Quality and Clinical Governance and a plan to address weaknesses and ensure continuous improvement of the system is in place. The Head of Internal Audit has provided me with an overall opinion of reasonable assurance that the internal controls are working effectively. This is based on an assessment of the Assurance Framework and on controls reviewed as part of the internal audit work. The internal auditors have issued reasonable or significant assurance opinion on most audits undertaken in 2013/14. Taking this into account alongside other evidence, it is reasonable for me to conclude that internal controls are working effectively within the Trust, There are, however, improvements which could undoubtedly be made, and some of these will flow from the Quality Improvement Plan which the Trust has implemented following its Inspection by the CQC in September. Annual Governance Statement Page 11

13 Annual Governance Statement However, to date two limited assurance reports have been received: one on an aspect of the Trust s data quality arrangements; and one on Incident Reporting. Work is in hand to address the weaknesses revealed in each case, but other work is to be completed, which could result in one or more further limited assurance reports. Most of the recommendations issuing from the finalised audits have already been implemented, and progress is being made in all other areas to address the issues identified by audit. Monitoring of implementation of recommendations is carried out by the Executive Management Board and the Audit. In March 2014 a decision was made that outstanding recommendations would be reported monthly to the Executive Management Board and this will continue throughout 2014/15. My review is also informed by a variety of other sources of information. These include: The views and comments of stakeholders Patient and staff surveys Internal and external audit reports Clinical benchmarking and audit reports Mortality monitoring Reports from external assessments such as CQC Quality and Risk Profile Deanery and Royal College assessments Accreditation inspections of clinical services NHSLA Risk Management Standards assessment PLACE self-assessments Serious Incidents The Trust reported 262 serious incidents to the National Reporting and Learning Service (NRLS) within the year (this compares with 160 for 2012/13), 156 of which were de-escalated by the Patient Safety Team at NHS London following investigation and submission of reports. All serious incidents are fully investigated using root cause analysis tools and are reviewed by the Serious Incident Review Group which is chaired by the Medical Director. The Trust has produced an annual Quality Account for 2013/14 and the governance system described above has been used to validate its content and the data on which it is based. I have highlighted in earlier sections of this Statement the significant issues which have faced the Trust over this period, and all appropriate corrective action has been taken in response. Through review of the assurance framework, the Board has not identified any further significant issues that fall within the scope of the requirements of this Governance Statement. Accountable Officer: John Goulston, Chief Executive Signature: Date: 4 June 2014 Annual Governance Statement Page 12

14 Appendix 1 Annual Governance Statement GOVERNANCE COMMITTEES STRUCTURE FLOWCHART Fire Safety Security Management Group Water Quality Group Waste Management Health, Safety & Environmental Governance TRUST BOARD Emergency Preparedness, Resilience & Response Research & Development Clinical Audit & Effectiveness Remuneration Informatics Board Capital Planning Group Information Governance Health Records Safeguarding Children Steering Group Safeguarding Vulnerable Adults Steering Group PLACE Privacy and Dignity Group End of Life Steering Group Health Information Group Resuscitation & Deteriorating Patient Hospital Transfusion Radiation Safety Ethical (including Consent) Thrombosis and Thromboprophylaxis FLAG Organ Donation Infection Control (Decontamination) Medicines Management Safeguarding Improving Patient Experience Patient Safety & Mortality Monitoring Quality & Clinical Governance Finance and Performance Audit Charitable Funds Executive Management Board All Execs 4 Clinical Directorates Boards Risk Assurance and Policy Group Clinical Cabinet People & Organisational Development Business Planning Steering Group Quality, Improvement, Productivity and Prevention Steering Group Emergency Care Board Access, Equality and Diversity Health and Wellbeing Group Local Education Annual Governance Statement Page 13

15 Appendix 2 Annual Governance Statement Annual Governance Statement Page 14

16 ABOUT CROYDON HEALTH SERVICES NHS TRUST Croydon Health Services NHS Trust (the "Trust") was established in 1993 (Statutory Instrument 1993 No. 27) and provides a range of healthcare services to a population of around 377,570 centred on the London Borough of Croydon. In 2013/14, the Trust provided services from the following sites: Croydon University Hospital, a 643 bed acute hospital in Thornton Heath; Purley Hospital, providing outpatient, urgent care and diagnostic services The Sickle Cell and Thalassaemia Centre located in Thornton Heath; A minor injuries unit in New Addington providing a nurse-led walk in clinic; Various Community Services sites. The Trust is one of the largest employers in Croydon, employing 3,166 permanent whole time equivalent staff at 31 March 2014, with a turnover of circa 244 million in 2013/14. The Trust's main source of income is from services commissioned by Croydon Clinical Commissioning Group (CCG), NHS England and London Borough of Croydon. The Trust has smaller contracts with other neighbouring CCGs. SUMMARY OF 2013/14 FINANCIAL PERFORMANCE Key Financial Targets The table below sets out the Trust's Financial Targets, and its performance against these, in the 2013/14 Financial Year: Target Breakeven on revenue and operating costs Keep within the capital resource limit (CRL) of m Performance The Trust achieved a deficit of 25.1m ( 19.7m deficit after technical adjustments) The Trust remained within the CRL, and generated an underspend of 0.181m Target met? O P Remain within the external financing limit (EFL) of m The Trust remained within its EFL, and over achieved on this by 0.509m P Keep within a Capital Cost Absorption Rate (CCAR) of 3.5% The Trust kept within the 3.5% CCAR. This has resulted in dividend payments of 5.318m to the Department of Health. P Further copies of these accounts can be obtained from: PA to the Director of Finance and Planning Croydon Health Services NHS Trust 2nd Floor, Nightingale House 530 London Road Croydon CR7 7YE Tel: Introduction Page 15